$USB call buyers turn quick profits

It took just one session for option traders to double their money in U.S. Bancorp.

On Friday, Aug. 24, Investitute’s tracking systems showed that 2,830 Weekly $24 calls expiring on Oct. 5 were purchased for $0.29 to $0.31 with shares at $53.95, the second of two bullish trades that day. This was clearly a new position, as there was no open interest in the strike before the trade occurred. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded up to $0.56 this afternoon, twice their initial purchase price. The stock rose 1.09% at the same time, illustrating how the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

USB was up 0.83% today to close at $54.46. The bank is scheduled to report earnings on Oct. 17 before the market opens.